FTSE 100 stays higher after BOE stands pat

LONDON (MarketWatch) — The U.K.’s FTSE 100 index stayed firmly higher on Thursday after the Bank of England left its monetary policy unchanged as expected. Heavyweight Vodafone Group PLC posted one of the biggest gains after a well-received earnings report, while AstraZeneca PLC dropped after swinging to a loss.

The FTSE 100 index
UKX, -0.21%
gained 1.6% to end at 6,558.28, closing at the highest level in over a week.

The benchmark opened in positive territory and stayed higher after the BOE’s Monetary Policy Committee left the size of its bond-buying program unchanged and held its key lending rate at a record low of 0.5%, where it has stood since March 2009. The committee left its asset purchases, the centerpiece of its quantitative-easing strategy, at 375 billion pounds ($611 billion).

The central bank didn’t release a statement on its forward guidance, as was expected by some economists. The bank’s forward guidance has been in the spotlight recently as the U.K. unemployment rate inches closer to its 7% threshold, and economists are speculating whether this will trigger the BOE to change its strategy. On Feb. 12, the bank will release its quarterly inflation report, which could also include a discussion about the forward guidance, analysts said.

“The Bank of England kept stum as it prepares to change forward guidance at next week’s Inflation Report,” said Rob Wood, chief U.K. economist at Berenberg.

“This recovery has been a long time coming and inflation is quiescent. But the economy is growing and tightening much faster than the BOE had expected. An economy no longer in an emergency does not need emergency interest rates,” he added.

On a more downbeat note, shares of AstraZeneca PLC
AZN, -0.85%AZN, -1.91%
dropped 1.6% after the drug maker said it swung to a loss in the fourth quarter, as it suffered a $1.76 billion impairment charge due to disappointing sales of its diabetes drug Bydureon.

Outside the main index in London, shares of Imagination Technologies Group PLC
IMG, +3.94%
rallied 14% after the technology firm said it extended its multiyear licensing agreement with Apple Inc.
AAPL, +1.72%

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